EABL executives’ shares jump to Sh585 million

EABL chief executive Andrew Cowan. FILE PHOTO | NMG

What you need to know:

  • The stock compensation is not based on set performance targets.

The number of shares bought by East African Breweries (EABL) #ticker:EABL for its executives and other employees has increased to 2.9 million units with a current market value of Sh585 million.

Disclosures in the company’s latest annual report show that the brewer made net purchases of 495,965 shares in the year ended June under its employee share ownership plan (Esop).

The shares, which are sold to the brewer’s staff at discounts of up to 20 percent on the prevailing market price, stood at 2.4 million units the year before.

EABL’s stock-based compensation plan is designed to encourage employees to own shares in the company and the staff are not required to meet any performance targets to participate in the scheme.

The share options vest in three years. The Esop is split into two, with ordinary employees assigned the most lucrative version which gives them a 20 percent discount.

“The grant price is fixed at 80 percent of the market price at grant date,” EABL says of the Esop for rank-and-file workers.

“The vesting period for the shares is three years after which an employee can exercise the option within seven years. There are no performance conditions attached to this share plan.”

There is no discount for the executive plan but both schemes have the potential to earn participating individuals significant capital gains if the brewer’s stock rallies in the medium term.

The company’s share price has, however, dropped significantly in recent years, leaving some of the stock options in the red.

In the year ended June, the company’s executives Andrew Cowan (CEO), Jane Karuku (managing director of the brewer’s Kenyan subsidiary) and György Geiszl (finance director), exercised their rights to 55,219 shares combined that would have a current market value of Sh11 million.

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